5-Year Treasury Yield Breaks 5% for First Time Since 2007; Wall Street Lifts "Crash Threshold" to 6%

The 5-year Treasury yield surged nearly 20 basis points on Wednesday to top 5% for the first time since 2007, while the 10-year jumped above 5.1% to a 19-year high. The 2-year rose almost 15 basis points past 4.9%, extending its highest level since late 2024. The breach did not trigger an immediate global equity selloff, underscoring market resilience and growing divergence over rate risk. JPMorgan analysts said the "breakdown threshold" forcing a full equity re-rating has shifted from 5% to 5.5%–6%, as AI, advanced manufacturing and high-end services now represent a larger share of the economy. Investors are tolerating higher rates because cash-rich firms can sustain capital spending despite expensive financing. But Invesco's Paul Jackson warned the 10-year yield's 12-month moving average—now around 4.34%—would pressure global equities above 4.72%. He has cut equity exposure and added sovereign bonds. Fed's Goolsbee cautioned that a brief 5% touch differs materially from a prolonged stay above 5%, which would eventually erode corporate budgets. Emerging-market bonds and equity funds have seen billion-dollar outflows.